Synectics Regulatory News (SNX)

Synectics plc

("Synectics" or the "Group")

Trading Update

Synectics plc (AIM: SNX), a leader in the design, integration, control and management of advanced surveillance technology and networked security systems, provides the following update on trading for the year ending 30 November 2018.

Underlying profit before tax for the year ending 30 November 2018 is anticipated to be broadly in line with market expectations. Trading in the second half of the year has continued the trends in recent prior periods; in particular a weak performance in the UK on-vehicle security sector has been offset by strong results from global Gaming security. The Group's year end net cash position is expected to have strengthened to approximately £6.5 million (2017: £3.8 million), its pipeline of expected new business is somewhat stronger than originally expected, and the Board is increasingly confident of solid progress in the Group's results in the coming year.

As reported in the Company's interim results announcement, UK new bus registrations in 2018 are down significantly compared to last year, which has adversely affected Synectics' on-vehicle security activities. In addition, a large bus operator customer chose not to renew its fleet service contract on terms acceptable to Synectics, and a second customer took its service work in-house. As a result, management has restructured this business area, reducing operating costs by approximately £1.2 million in the financial year to 30 November 2019.

The restructuring and ongoing review includes an assessment of the quantity and value of stock used in the Group's on-bus service activities, as well as any other actions which may be required to address the reduced level of business expected in the UK on-vehicle sector. Management estimates that the restructuring, stock and other adjustments referred to above will result in an exceptional non-underlying cost in the Group's income statement for the financial year ending 30 November 2018 totalling approximately £2 million, most of which will be non-cash. The Group's continuing restructured on-vehicle security activities are expected to deliver an acceptable positive profit contribution in the financial year ending 30 November 2019.

In the global Gaming sector, Synectics has won a number of large new projects in both the Far East and the US from clients including Wynn and MGM, as well as growing repeat business from its established customers. A record financial performance from this growing sector is expected to be reported for the year ending 30 November 2018, and prospects remain excellent.

Across the Group's other market sectors, the year to 30 November 2018 was strong within UK infrastructure, with a number of notable wins for security in very high profile sites, including the Queen Elizabeth Olympic Park in London. The oil & gas sector continued to operate well below its past levels. While the benefits from increased oil prices and corresponding investment activity are now clearly visible, they are still working their way through the industry's planning and procurement processes.

Synectics will release final audited results for the year to 30 November 2018 on or around 19 February 2019.

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